AgroPages-China commits to buy more US soybean in ‘Good News’ for trade talks-Agricultural news

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China has committed to buying more U.S. soybeans, a good sign of progress on trade talks between the nations, according to Agriculture Secretary Sonny Perdue.

“In Oval Office meeting today, the Chinese committed to buy an additional 10 million metric tons of U.S. soybeans,” Perdue said in a tweet Friday. “Strategy is working. Show of good faith by the Chinese. Also indications of more good news to come.”

Since the U.S.-China trade truce began in early December, Chinese buyers have scooped up at least 6.9 million tons of American beans, government data show. People familiar with the transactions have said the Chinese have already bought close to 10 million tons.

News of additional purchases could be what’s needed to kick-start prices that have been trading in a narrow range this year. Prices could trade higher by as much as 10 cents a bushel when the market reopens on Sunday night, according to Rich Feltes, head of market insights for Chicago-based R.J. O’Brien & Associates. May futures settled on Friday at $9.23 3/4 a bushel.

The soybean purchases would dovetail with a proposal by Beijing to buy an additional $30 billion a year of U.S. agricultural products including corn, soybeans and wheat as part of a possible agreement. Still, the announcement caught traders by surprise after Donald Trump said this week that trade talks involved Beijing buying “a lot” of corn.

On Friday, a data dump from the U.S. Department of Agriculture Friday showed net-export sales to China during the six weeks ended Feb. 14 totaled 3.92 million metric tons for the 2018-2019 season. That was basically in line with previously reported sales during the period.

The news of more purchases “could be very reassuring to the market after the disappointing export sales numbers we had come out this morning," said Niko Anderson, a grain broker at SCB Group in Chicago. "And further, this can only be seen as encouraging for the overall trade negotiation."

The good news for American farmers will be at the cost of growers in rival Brazil, where this year’s harvest is underway. The goodwill purchases will probably see Chinese state-run firms buy U.S. supplies at higher prices than soybeans from Brazil, upending market economics.

"Our data today shows that harvest in Brazil is 43 percent complete, which means that they have a lot of soybeans headed to the port to export," said Arlan Suderman, chief commodities economist for INTL FCStone. "This cannot be good news for the Brazilian farmer, particularly with demand in China in decline beyond what its state-grain buyers are purchasing for its reserve."